Summary: Mrs B complained about the action the Council took in respect of a business rate debt of her late husband. We find the Council was wrong to say Mrs B was a director of the company and liable for the debt. This caused her significant distress at a very difficult time. The Council has agreed to pay Mrs B £100.

The complaint

1. Mrs B complains that the London Borough of Hounslow (the Council), in respect of a business rates debt for her late husband’s business:
• took too long to conclude that the company did not owe the money;
• harassed her for an unreasonable period of time and failed to listen to her concerns; and
• failed to consider her exceptional circumstances in its approach or offer any discretion with regards to refunding the money.
2. She was caused significant distress at a very difficult time.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

5. I have considered the complaint and the documents provided by the complainant, made enquiries of the Council and considered the comments and documents the Council provided. Mrs B and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

6. Mrs B’s husband, Mr B ran a business from leased premises with a car-parking space. He died suddenly in November 2018. Mrs B has two teenage children, one of whom is disabled. Mrs B was listed as company secretary but she was not a director of the business. The Council held two business rates accounts for the unit and the parking space.
7. In December 2018 Mrs B cleared the premises and found arrears letters for business rates including a liability order. She gave the keys back to the landlord of the business premises and on the advice of her solicitor she closed the business bank account.
8. In June 2019 the business accountant forwarded notices in respect of the business rates to Mrs B. Mrs B contacted the Council to inform it of Mr B’s death. She said she had surrendered the property in December 2018. She said the business was no longer in operation and she had nothing to do with it.
9. The Council noted the company was still listed as active at Companies House. It contacted the landlord, who said the property had not been surrendered until August 2019.
10. The Council sent demands for business rates of £2295 to the accountant. The accountant forwarded these to Mrs B. She contacted the Council in September 2019 to say she handed the keys back in December 2018 and was very upset by the continued correspondence. She also spoke to the Council and said she felt threatened by its response, insisting she had to pay.
11. The Council replied on 9 October 2019. It said the business was still listed as active with Mrs B as a director. It had removed the accountant’s details from the account and would send future correspondence to the home address. It said the landlord had not accepted that the lease ended in December 2018 so the Council had a duty to collect the business rates up until July. It said Mrs B could make a payment arrangement if necessary.
12. Mrs B complained to the Council about its treatment of her.
13. On 11 October 2019 the landlord informed the Council it had made a mistake and Mrs B had surrendered the premises on 18 December 2018 the Council adjusted the account (now @£2000 in credit) and sent notification to Mrs B. It also responded to her complaint. It apologised for the situation but said it was due to the landlord providing incorrect information. It acknowledged it had made an error treating her as a director and apologised for this.
14. Mrs B then asked for the Council to refund the credit to her bank account. The Council said it could only refund the money to the business bank account.
15. Mrs B complained to the Council and we referred the complaint back to the Council to investigate and respond. In January 2020 it wrote to Mrs B explaining that it could only refund the money to a business account or an account in the name of the person who paid the business rates. It suggested she could re-open the business bank account for this purpose.
16. Mrs B complained again to us. She said she was scared of losing her house as a result of the debt. She felt the Council was very threatening and not at all understanding at such a difficult time.
17. The business was dissolved on 3 March 2020 and the Council says it will pay the credit to the Crown.

Analysis

18. The Council was not at fault in its initial attempts to collect the debt. It sent correspondence to the accountants and Mrs B did not inform it until June 2019 that Mr B had died in November 2018. It did not send correspondence directly to Mrs B and acted on her information closing the account with effect from December 2018.
19. The re-emergence of the debt in September 2019 was the result of the error by the landlord disputing the date the lease was surrendered. This resulted in further recovery action. The Council sent a bill and a letter to Mrs B on 7 and 9 October 2019 and she had several telephone conversations with the Council. It said she was a director of the company and asked her to make a payment. This was fault as she was not a director of the company and was not liable for the debt, which caused Mrs B distress and frustration at a difficult time.
20. However, the matter was rectified within two weeks when the Council sent out notification that the account was in credit, following further communication from the landlord.
21. I cannot find fault with the Council for saying it can only refund the credit to the business bank account.

Agreed action

22. I note the distress was relatively short-lived and the Council has apologised for the error in treating her as a director of the company. However given the very difficult situation Mrs B was experiencing I consider her level of distress was significant and I asked the Council (within one month of my final decision) to pay her £100.
23. The Council has agreed to my recommendation.

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Final decision

24. I consider this action is a proportionate way of putting right the injustice and I have completed my investigation on this basis.

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Investigator's decision on behalf of the Ombudsman